On January 20, 2021, the COVID-19 emergency relief measures were extended on all federal student loans owned by the U. S. Department of Education (ED) through at least September 30, 2021.
The suspension of payments applies to the following types of federal student loans, but only if they are loans owned by ED:
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Defaulted and nondefaulted Direct Loans
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Defaulted and nondefaulted FFEL Program loans
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Defaulted and nondefaulted Federal Perkins Loans
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Defaulted HEAL loans
To find out if your Direct and FFEL Program loans are owned by ED, visit StudentAid.gov/login.
One of the major relief measures is 0% loan interest through September 30, 2021. This includes loans that are in repayment and loans for current students. The 0% interest was automatically applied, and all payments have been suspended.
If you made any payment on your federal student loans after March 13, 2020, you could request a refund. To do so, contact your loan service to request that your payment(s) be refunded. Keep in mind that this will increase your loan balance.
There may be some financial planning strategies that you can implement in order to manage your student loans. Instead of making payments during the 0% interest period, you may want to consider putting these funds in an interest-bearing savings account. These savings can then be used to pay down the loan once the normal interest rates resume.
As 2021 progresses, we anticipate more information to come out about potential loan forgiveness and other student loan COVID-19 relief measures.
All of the student loan relief measures can be found here.
For more information about the above article or other financial planning services, contact Joe Janning, CPA at (334) 887-7022 or by leaving us a message below. We have a team in place to help you create a customized student loan management plan.
